The world’s first bitcoin exchange traded fund is off to a hot start. The Purpose Investments bitcoin ETF now has more than $590 million in assets under management after launching just one week ago.
The ETF was the first physically settled Bitcoin ETF to win approval and began trading in Canada on Thursday. It now gives investors a more direct way to invest in bitcoin relative to other closed-end funds like the popular Grayscale Bitcoin Trust (GBTC) and a less direct way than outright owning bitcoin through an individual wallet.
Purpose Investments Chief Investment Officer Greg Taylor thinks that the inflows are proof of pent-up demand among investors looking for a more familiar way to gain exposure to cryptocurrencies.
The Purpose Bitcoin ETF (BTTC) carries a management fee of 1%. Its competitor and second ETF to gain approval, the Evolve bitcoin ETF (EBIT) cut its management fee to 0.75% on Wednesday.
Both differ from closed-end trusts in that they directly purchase bitcoin and hold it in cold storage without the risk of trading at large premiums to the value of the ETF’s underlying bitcoin holdings.
According to Taylor, the Purpose Bitcoin ETF has seen inflows from around the world on the retail and institutional side.
A similar surge in institutional interest in cryptocurrencies was also revealed in Coinbase’s Thursday filing with the Securities and Exchange Commission to go public via a Nasdaq direct listing.
Coinbase revealed its institutional trading volumes nearly tripled from 2019 to 2020 to reach $119 billion. Crypto advocates point to that institutional exuberance and purchases from publicly traded companies like Square and Tesla as proof that this bitcoin rally is not like the boom and bust that occurred in 2017 and 2018 when he crypto fell nearly 85% from a peak of $20,000.
Coinbase’s initial filing revealed institutional trading volume totaled just $28 billion in 2018.
Regulators in the U.S. have yet to approve a bitcoin ETF, though investor and Galaxy Digital founder Mike Novogratz said that it is likely to happen within the year, given Canada’s approvals and the inefficient premiums observed in bitcoin trusts.